For DC Savers, Better Returns May Translate into Longer-Lasting Income

09 July 2026

2 min read

The Potential of Enhancing Returns: Spending for Longer

Hypothetical Retirement Saving and Spending Illustration (US Dollars)

Hypothetical illustration of participant saving and retirement spending experience

This is a hypothetical return illustration only and does not guarantee future results. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve returns or a volatility profile similar to those being shown. The retirement savings phase simulates an inflation-adjusted salary of $45,000 at age 25, increasing linearly to $75,000 by age 65. Yearly total contributions (employee plus employer) begin at 9% of salary at age 25, rising by 0.5% per year up to a maximum 13%. The spending phase estimates a $22,500 (30% of final salary) inflation-adjusted Social Security benefit. $41,250 (55% of final salary) inflation-adjusted spending is deducted at the start of each year. The yearly real investment return is 4% until age 40, declines linearly to 2.5% at age 80 then stays constant. In the “1% Greater Return” scenario, real return is increased by 1%. Inflation is a constant 2.5%, and dollar values are in real purchasing-power terms. As of December 31, 2025. Source: AllianceBernstein (AB)

For defined contribution (DC) plan participants, the ability to improve investment returns may make a sizable difference over time—a difference that may translate into more effective wealth building and more years of income in retirement.

What avenues do DC plan sponsors have to pursue those enhanced returns? There are quite a few. They include better asset allocation, diversifying building blocks and active management. Individually or in combination, the choices plan sponsors make could help participants build more savings during their working years and improve the odds that those savings last longer in retirement.

To bring home the point, consider a hypothetical participant invested in a DC retirement solution that’s able to increase its annualized returns by just one percentage point over the course of the participant’s retirement journey (Display, above). That may seem like a modest return boost, but it could translate into 25% more savings at retirement. That extra savings could help fund as many as 10 additional years of spending in retirement. With people living longer lives, that decade could matter a lot.

The takeaway seems clear: better solution design has the potential to deliver higher returns, and plan sponsors have many levers to pull in achieving them. In our view, these efforts, along with solutions that deliver guaranteed income, may help participants make the most of their hard-earned savings and feel more confident that their income can last throughout retirement.

The views expressed herein do not constitute research, investment advice or trade recommendations, do not necessarily represent the views of all AB portfolio-management teams and are subject to change over time.

“Target date” in a fund’s name refers to the approximate year when a plan participant expects to retire and begin withdrawing from his or her account. Target-date funds gradually adjust their asset allocation, lowering risk as a participant nears retirement. Investments in target-date funds are not guaranteed against loss of principal at any time, and account values can be more or less than the original amount invested—including at the time of the fund’s target date. Also, investing in target-date funds does not guarantee sufficient income in retirement.

This is a marketing communication. This information is provided by AllianceBernstein Schweiz AG, Zürich, a company registered in Switzerland under company number CHE-306.220.501. AllianceBernstein Schweiz AG is a financial service provider within the meaning of the Financial Services Act (FinSA) which is not subject to any prudential supervision in Switzerland. Further information on the company, its services and products, in accordance with Art. 8 FinSA can be found on the Important Disclosures page at www.alliancebernstein.com. It is provided for informational purposes only and does not constitute investment advice or an invitation to purchase any security or other investment nor is it a recommendation to subscribe to a financial service. The views and opinions expressed are based on our internal forecasts and should not be relied upon as an indication of future market performance. The value of an investment can go down as well as up and investors may not get back the full amount they invested. Capital is at risk. Past performance does not guarantee future results.

This information is directed at Qualified Investors only and is not intended for public use.